Crisis management insurance

A successful cyberattack crisis response plan requires extra resources, expert help, and cash to cover it all. That’s where crisis management insurance comes in, paying for recovery costs, including:

• Public relations (PR) consulting services to manage communications and rebuild customer trust
• Forensic IT investigations to determine an incident’s cause and scope
• Customer notification costs to inform affected individuals
• Credit monitoring services for impacted customers
• Business interruption expenses to keep the business running

Between emails, social media accounts, online payment processors, cloud-based software, and a vast catalog of other technological tools, almost every business is vulnerable to cybercriminals. So, whether you own a coffee shop, a yoga studio, a cleaning service, or other type of small business, having crisis management insurance is a crucial part of your risk management protocol.

There are many steps involved in cyberattack recovery, including legal requirements. Depending on your state and the type of business you run, these regulations can include:

• Notifying affected individuals
• Following industry-specific laws and regulations, such as Health Insurance Portability and Accountability Act (HIPAA) and payment card industry (PCI) compliance
• Notifying relevant regulatory authorities, such as the Federal Trade Commission (FTC) or the Attorney General
• Notifying the public, whether through the media or other means

Crisis management insurance also helps businesses minimize downtime and avoid large business interruptions.

To help control the narrative and repair the public’s opinion of your brand, the policy will cover:

• The cost of crisis management consultants and PR teams to help restore your business’s reputation
• Marketing consulting services to launch strategic social media and digital campaigns to earn back customers’ trust

Between compliance violations, state laws, and lawsuit costs, your legal fees can add up quickly. That’s where insurance comes in to pay for:

• Counsel to help you understand data breach legal requirements
• Lawsuit-related costs, including attorney fees, settlements, or judgments
• Regulatory fines and legal penalties stemming from the incident

When a cyberattack disrupts your operations, it also disrupts your income. Crisis management insurance provides:

• Financial protection, covering loss of profits, rent, and other day-to-day costs to keep operations running during recovery
• Cash for extra expenses to get your business back on track, such as leasing equipment or covering overtime wages

To minimize downtime and help your company fully recover, crisis coverage will pay for:

• A team of cybersecurity experts, including forensic investigators and IT consultants, to help you recover data, get systems back up, and determine the cause of the cyberattack
• Ransomware payments in cases of cyber extortion

To beef up your cybersecurity efforts and help prevent future cyber incidents, crisis management insurance will handle the cost of:

• Cybersecurity services to evaluate your security protocols, such as a cyber insurance audit, to find vulnerabilities
• Network and security consultants to establish the right software and security processes to prevent future cyberattacks

Because hackers target a wide range of company sizes and industries, crisis management insurance is highly recommended for every business. However, certain companies can be more vulnerable to cyberattacks, such as businesses that:

• Handle Social Security numbers, credit card information, and other sensitive customer information, such as accountants, stockbrokers, and online retailers
• Operate under strict regulations, such as HIPAA and Securities and Exchange Commission (SEC) laws, including doctors, nurses, and financial planners
• Offer technological services or products, including software developers, web designers, and web-hosting businesses

Having crisis management coverage provides financial protection and peace of mind for small business owners amidst the rising threat of social engineering attacks, malware infections, and other cyber incidents.

Cyberattacks aren’t the only thing that can damage a business’s reputation. If your business has a massive layoff, a product contamination incident, or other event that causes bad press, here are some additional insurance options that offer crisis management coverage:

• Directors and officers insurance (D&O): This insurance product covers losses from claims alleging wrongful acts by a company’s directors and officers. Crisis management is included in many D&O policies to handle recovery costs in the aftermath of crisis events, such as layoffs, workplace violence, and other insured events that generate adverse publicity.
• Product recall insurance: This insurance product covers first-party and third-party product recall costs, including crisis management solutions for recalls of faulty and contaminated products.
• Kidnap & ransom insurance (K&R): This policy covers crisis response experts, reimbursement for ransom payments, and other expenses incurred during a crisis related to extortion, kidnapping, hijacking, a hostage crisis, or other insured events.

Although certain crises, such as active assailants, political violence, and civil commotions, aren’t covered under standard business insurance policies, there are specialized insurance solutions that can provide this coverage. If you’d like more information on coverage for these types of threats, our licensed insurance agents are here to help.